Going unconditional

Once you’re unconditional on a property, you’re committed.

There’s not many things in life you get locked into as tightly as a contract to purchase a property.

The Illusion of Accuracy

There’s a new beer around with 0.0% alcohol. Except that it’s actually 0.0%* alcohol.

Notice the difference? It’s the *.

The * means that there’s “less than 0.05% brewed alcohol”. Because there isn’t actually 0.0%.

If there were no alcohol, it would say no alcohol. Or may 0% alcohol. But then it also wouldn’t be beer, it would be a ‘beer flavoured’ fizzy drink, and I doubt that would sell very well.

The accuracy of the label gives the illusion of certainty and correctness.

If you’re buying or selling a house, 0.05% doesn’t make much of a difference. It’s $250 of real estate agent’s commission on a $500k house sale. Or just under $3,500 more (or less) in total mortgage payments for a 30-year $300k mortgage.

But an agent with 3.95% commission gives an impression of being more reasonable, more fair and less out to make money than an agent with a 4% commission. And a bank with 4.65% interest rate seems more generous than a bank with a 4.70% interest rate.

If percentages were written to make more sense, then we wouldn’t buy the service.

The accuracy of the value gives the illusion of affordability and fairness.

Unbalance the seesaw

Some things work better when they’re unbalanced.

A seesaw isn’t one of them.

Unless your goal isn’t to go up and down, but to elevate something and ground another.

If life was like an unbalanced seesaw, success comes when we hold our hopes lightly, and ground your expectations in reality. Elevate our hopes with anchored expectations.

Light hopes, grounded expectations. And on the seesaw:

High hopes, low expectations.

Making soup

A friend of mine got distracted while caramelising onions. She was caught up in a conversation with her neighbour. The onions turned black.

The reason for caramelising the onions in the first place was to use up some leeks from the garden. And the only thing you can do with leeks is make soup*, so she was making soup. And caramelised onion makes all vegetable soups better.

It turns out, the onions weren’t burnt, they were just extremely well caramelised.

And it turns out, the soup was delicious.

There's not much of a point to this story, other than to say that the soup was delicious, and I’m really glad my friend decided to spend time with her friend instead of doing what she planned. Sometimes, perhaps always, that’s the most important thing.

Tomorrow, I might say hi to one of my neighbours.

* Please feel free to send in your non-soup uses of leeks.

Non-newtonian moments

Take a cup of of cornflour (a.k.a cornstarch) and add nearly two cups of water, and you’ll have a non-newtonian fluid, also known as ooblek.

Ooblek has some unusual properties. For example, if you fill a pool with it (which is a lot of flour!) you can run across the top!*

Basically what happens is that when a non-newtonian fluid is struck, it ‘hardens’. If you stand still on the pool, you’ll sink. But if you run and stamp your feet, you’ll make it across the pool.

In projects, there comes a point when pushing harder won't make you go faster. When applying more force just increases the resistance. When spending more time, just takes up time.

That's when you need to pause.

It's normal for a project to hit the wall at some point. Most weeks, most days have at least one hump to get over. 

The trick is not to try harder, but to relax, stand still and sink into the moment.

* If you haven’t seen videos of this, go to youtube right now and search for “people running across a pool” or something similar.

Starting a drag race

The start of creating something collaboratively can feel a little like you’re all spinning your wheels. Like you’re just generating a whole lot of smoke and noise, and not a whole lot of forward movement.

One reason might be that the handbrake’s on.

Another reason could be that the direction’s you’re facing is being tweaked so that once you get traction, you head off down the straight and not into the stands.

The trick is knowing which is which, and not blowing out a tyre while you spin.

One is never enough

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So an affordable housing system needs diversity. It needs collaboration through common ownership. It needs different design.

It might start under one roof, on one patch of dirt, in one corner of the planet, but it can’t end there.

We can’t all fit under one roof. We might need to fake it for a while, but eventually, if this is for everybody, we’re going to need more houses.

More Good Homes, owned by more good people.

Diverse ownership

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If making housing affordable means buying property together, the long-term picture also means living together. And your average median-priced house isn’t going to work out for a group of people all moving through the same stages of life at the same time.

The system requires diversity to work.

To start with, this is going to mean housing that can accomodate different types of people.

Multiple generations under the same roof (or at least with the same letterbox) it’s almost like we’ve been here before…

We're going to need a bigger boat

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If housing affordability means we need to buy property together, we’re also likely to live together for longer. I suspect most of the median-priced housing stock won’t go the distance. To small and/or to low quality.

We need a bigger, better boat.

And by better, I mean a Good Home: Warm, dry, low-energy, efficient design, simple.

And by bigger, I mean rooms for kids.

Can we make it affordable?

It’s time for a thought experiment:

Let’s take three friends each earning the median income. Some have children, or will have children while living together, but we’ll assume part of the picture is supporting parents to stay at home full-time, so we’ll stick with three incomes.

A person on the current median annual income can afford around $210,000 of property. So our three people can afford a $630,000 home.

For our better boat, we’ll assume a build price of $3000 per square meter.

For our bigger boat, let’s assume we can get a five-bedroom house with space for 4-5 adults and a few children into 130 square meters. A little on the small side, so we’ll need some simple(r) living practices.

The affordable Good Home costs $390,000, leaving $240,000 for a section.

Not a slam-dunk by any means, but potentially, we might be able to have Good, Affordable homes if we’re willing to share them.

An affordable housing solution

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There’s a couple of different measures of housing affordability:

  1. Ratio of price to income (i.e. house price divided by income before tax).

  2. Percentage of income (before tax) required to own a house.

The target for these two measures are generally:

  • A ratio of less than 3.0 is a good target for “affordable”

  • Spending 20% - 30% of gross income on home ownership is “affordable”

So what does this look like in New Zealand?

In 2017, the median personal income from wages and salaries was $45,883 (before tax). The median household income from wages and salaries was $79,000 (before tax).

Using the target of a 3:1 ratio of house price to income, a house costing more than about $280,000 isn’t affordable for 50% of households.*

Using a target of 30% of income going to housing costs and making some simplifying assumptions about costs and equity** 50% of individuals cannot afford a house costing more than $212,500.***

So with a national median house price of $549,000, and just over $850,000 in Auckland (our largest city), how can we buy houses?

Try looking at it this way:

  1. A 20% deposit on a $550,000 house is $110,000, leaving $440,000 to be financed.

  2. An individual earning the median income of around $46,000 can afford a mortgage of $170,000 (using the same assumptions as earlier**).

  3. That means 3 individuals can afford to buy a house. You’ll need 4 in Auckland.

That’s how we do affordable housing: Together

*For an individual income the price would be around $138,000.

**Assuming mortgage has a 7% interest rate, 25 year term with bi-weekly payments, ignoring rates, insurance and maintenance costs etc, and assuming a 20% deposit is required.

*** For a household the price would be just over $370,000.

We're taking up too much space

9 billion people by 2050.

9,000,000,000.

One thousand groups of nine million people.

One planet.

We need to make more room.

And we can’t simply make more room.

So we each need to take up less space.

You're taking up too much space.

The tiny house movement is proving that, for many people, living smaller is possible.

People in the majority world have demonstrated the uncanny human ability to do much with very little.

Neither of these options may be a desirable norm, but they should at least prompt us to take stock of how much space we take up. And of the things that take up the space.

One simple action for impact

A friend of mine once said “Relationships are the stuff of life, James”

I’m not entirely sure who James was, or is, but I think my friend had a point. And I think his point is valid on multiple levels.

Here’s one:

For an idea to have impact, it needs to spread.

And for an idea to spread, it needs a vehicle. A carrier. A courier.

And one of the best vehicles is our relationships.

There are other ways to design, own and live in our houses. You'll find some of them in this blog. You’ll have some more yourself.

Share one of those ideas with someone else.

*If you’d like to share them with me, send me a message!

Who is it for?

The thing you’re building, who is it for?

The affordable housing development that’s being planned? Who’s it for most of all?

Now ask this: Who is getting the biggest benefit?

Are they the same person?

Translating across contexts

Good housing is getting some recognition.

Our local context isn’t the same as major urban centres. We’ve got a few more earthquakes. A community unaccustomed to apartment living. A relatively small population. A rebuilt-and-rebuilding central city. And really expensive construction costs.

That is, if you want to live in a house you would want your grandchildren to live in, rather than something you home someone else will want to live in. And pay more than you did for it.

What does ethical, grounded, alternative property development look like outside of a major urban city? I suspect it’ll be the same, but different. Most likely more of the key ingredients.

Collaboration.

Transparency.

Values-led.

Holistic.

If it 'aint about the money then what's the point?

In order to be not-for-profit, but for-purpose, you need to have a purpose.

What's the purpose of property?

Using property as a means of accusing wealth, saving for retirement and providing a sense of financial stability and security isn't wrong. These are all good things. But are they the best things?

We can do better.

Here's some potential pieces of the property purpose puzzle. We might explore these over the coming days.

The Purpose of Property is:

  1. To connect people to each other.
  2. To connect people to the land.
  3. To connect people to themselves.
  4. To share wealth equitably.
  5. To share space well.
  6. To produce food.
  7. To provide stability and security of accomodation.
  8. To stabilise communities.
  9. To support good physical health.
  10. To do all of these things well.

 

Change doesn't happen at a distance

It should come as no surprise to anyone that doing ethical property development requires a transfer of wealth.

The status quo inherently disadvantages those who have less. So the ability to do make an impact is limited by the amount of value that is available. If a bunch of us get together with sticks, we're not going to build a brick house. Someone with a large brick house is going to have to tear down their second (or third, or fourth) home to give us some bricks.

When there's a fixed amount of something, those with lots have to give up at least a little in order to achieve genuine equity.

It turns out, do do things differently requires all of us. Change doesn't happen at a distance.

What's the hardest part?

The hardest thing about living together on this planet, in this city, on this street, is doing it together.

You could argue that doing life together is the point of life itself. We see to have forgotten this around here, at some point along the way..

Or maybe we've sold out. Maybe we live with the cry of "I don't need this in my life" ringing on in our ears. Maybe the pursuit of happiness just leaves us blinded by the shining light of our own dreams.

Somewhere along the way we've bought into the idea that we don't need to do the hard stuff, the tough journeys, the challenging conversations. We don't need to do the emotional labour of sharing our house, our street, our life with someone. 

It might be hard, but it's worth it.

And learning to life together, to work together, to share space together is only going to be more important.